| by Zack Poole "Tha Book Plug" |
I first became aware of Taleb’s work in Denver, Colorado being referenced in a Podcast by Vitaliy Katsenelson. Mr. Katsenelson writes about Value Investing symphonically producing pieces about market news that read like a synergistic fusion of Ray Dalio and Alexander Pushkin. All with the fun and excitement of Jesse Livermore or Peter Lynch and his own genuine family values and integrity which emanate from his words.
So as an obvious admirer of this series; I was enthusiastically motivated to get to a book from Mr. Taleb as rapidly as I could. However, work, bills, relationships, distractions, Colorado weather – I had distanced the idea of finding this book to the furthest abyss of my mind. After punching out from my shift I went to the local thrift store to browse the book section as I typically do being a faithful reliever of stress.
The books here are weathered and tattered and thrown around in piles covered in a coat of donation children’s books and their crayon markings. An absolute mess. But for a lover of books this offers the sensation of a treasure hunt.
I removed the first book on top of the heap. Something in the genre of self-help or motivation to the tune of “The Speed of New York Times Oprah’s Book Bestsellers How To” and I was astonished. Speechless, which is the rarest of qualities that I possess. I was face-to-face with “Fooled by Randomness.” I would love to discuss this with Mr. Taleb and hear his analysis of the odds.
I became an instant fan. So many of his discussions were inherently counterintuitive to my core belief structure, but this is the world of Finance. In Finance if you don’t have an open-mind you will soon find a closed account. I had to pause after chapters similar to the ancient monks practicing Lectio-Divina.
(PLEASE NOTE: I am in no way, shape, form or fashion comparing this text to gospel. I am only using this term in an effort to illustrate the need to stop and meditate after each discussion point. No worship was involved, no animals were harmed in the process and all other disclaimers – insert here____.)
Taleb’s thesis is a clarion call to recognize the omnipresence of randomness and its profound impact on our decisions, successes, and failures. He argues that humans, in their quest for order and explanation, often fall prey to the illusion of control, attributing outcomes to skill or knowledge when, in fact, they are products of chance. No argument here – but there’s more.
Taleb describes his perception in the deceptive nature of luck and the human propensity to misconstrue randomness as a calculable variable.
The book begins with the ancient fable of Solon and Croesus, where Solon warns the wealthy king that fortune is fickle and true happiness cannot be appraised until one’s final days. This sets the stage for Taleb’s exploration of randomness, where he posits that wealth accumulated over a short period is more likely a stroke of luck than a testament to skill.
Taleb introduces the concept of survivorship bias, highlighting our tendency to focus on winners while ignoring the vast number of losers who have fallen by the wayside. This bias skews our perception, leading us to overestimate the role of skill and underestimate the whims of chance. Agree or not – this is the upper echelon of thought provoking philosophy.
He further examines skewed distributions, where outcomes are not evenly balanced but are heavily tilted, often resulting in significant and unexpected losses. This is exemplified by the metaphor of option sellers who “eat like chickens and go to the bathroom like elephants,” illustrating the small gains overshadowed by catastrophic losses.
Taleb’s philosophy is not one of nihilism but a call for humility and the embrace of uncertainty. He urges us to question our assumptions, to be skeptical of experts who claim predictive powers, and to recognize the limits of our knowledge. “Fooled by Randomness” is a treatise on the human condition, a reminder that beneath the veneer of predictability lies a world governed by the capricious nature of chance.
Enter - My own internal warfare as the child of a dedicated Jungian Disciple. Good thing for me I’m also a Gemini.
Now, Mr. Taleb’s philosophy in “Fooled by Randomness” and Carl Jung’s concept of synchronicity present contrasting views on the nature of events and the interpretation of coincidences. Clash of the Titans – Round 1
LET’S GET READY TO RUUUUUUUUUUUUUUUUUMBLE
Divine Connection or Casual Coincidence?
Taleb’s work emphasizes the role of randomness in life and the markets, arguing that many outcomes attributed to skill or knowledge are actually the result of chance. He challenges the human tendency to find patterns and causality where none exist, suggesting that we often mistake luck for skill and coincidence for inevitability. That this unconscious desire to make connection and calculate is hand in glove with human nature.
On the other hand, Jungian psychology introduces the concept of synchronicity, which refers to meaningful coincidences that occur with no causal relationship yet seem to have a significant connection. Jung believed that these synchronicities reveal an underlying order and interconnection in the universe, which is not based on cause and effect but on a different principle of connection.
While Taleb’s philosophy points to the randomness and unpredictability of events, Dr. Jung’s synchronicity suggests that there is a deeper meaning and connection in coincidences that transcend the random. Taleb would likely view synchronicities as examples of the human mind’s propensity to construct narratives around random events, whereas Jung would see them as evidence of a unifying principle in the cosmos.
In essence, Taleb’s pragmatic philosophy contradicts Jung’s by denying the inherent meaning in coincidences and events in tandem with the human psyche, advocating for a more skeptical and probabilistic approach to understanding the world. Jung’s idea of synchronicity, however, embraces the possibility of a non-causal but meaningful alignment of events.
Marie-Louise von Franz, a Jungian psychologist, valued fairy tales and fantasy for their ability to reveal deep psychological truths and the workings of the unconscious mind. She saw fairy tales as a spontaneous and naive product of the soul, reflecting different phases of experiencing the reality of the soul. Von Franz believed that these narratives could provide insights into universal human experiences and the archetypal patterns that shape our behavior.
While Taleb cautions against seeing patterns where there are none, von Franz finds meaning and significance in the patterns presented by fairy tales and fantasy. Taleb’s position is likely more collectively probable whereas von Franz’s approach is more interpretive, seeking to uncover the symbolic and archetypal significance within stories.
Who’s Right? Who’s Wrong? Who Knows, Who Cares?
Shirts or skins, blue or red, left or right – no matter what turf you claim, gang you promote or philosophy speaks to you personally; This work of Mr. Taleb is a sterling example of philosophy and I would advocate it as required reading for any student of the mysterious dance between Economics and Psychology.
Thank you for a great read, Mr. Taleb. And I will be looking forward to many more.